Part I. Understanding Information Systems that
Support Organizational Performance
C hapter 2
IT Infrastructure and
Support Systems
C o u rs e
Copyright 2012 John Wiley & Sons, Inc.
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Chapter 2 Outline
2.1 Data and Software Application Concepts
2.2 Types of Information Systems and Support
2.3 Supply Chain and Logistics Support
2.4 IT Infrastructures, Cloud Computing, and Services
Copyright 2012 John Wiley & Sons, Inc.
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Chapter 2 Learning Objectives

Understand the types of information systems and
how they process data.
Understand the types of information systems used to
support business operations and decision makers.
 Describe how IT supports supply chains and business
processes.
 Understand the attributes, benefits, and risks of
service-based and cloud computing infrastructures.

Copyright 2012 John Wiley & Sons, Inc.
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2.1 Data and Software Application Concepts
Organizations have different types of information systems that
collect and process data, distribute reports, and support decision
making and business processes.
Starting with transactions that take place at an interface (e.g.,
withdrawing cash from an ATM), a transaction processing system
(TPS) processes the data as follows:
• verifies available funds
• subtracts withdrawn amount updating the data in the database
 Data are extracted from the database and organized into reports
using management information systems (MIS).
 Decision making is supported by decision support systems (DSS).

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Figure 2.1 Diagram showing the relationships among information systems.
Various types of ISs and applications support managers, workers, work
flows, business processes, and transactions with supply chain partners.
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Data, Information, and Knowledge

Data: raw data
• Database: stores data in such a way that it can be
accessed, searched, retrieved, and/or updated

Information: data that’s been processed, organized, or put
into context.

Knowledge: data or information that have been processed to
convey understanding, experience, accumulated learning, and
expertise as they apply to a current problem or activity.
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Figure 2.2. Example of data, information, and knowledge.
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2.2 Types of Information Systems and Support
ISs classified into 2 categories based on type of support:
management or operations
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Operations support system
Transaction Processing Systems (TPS)
Data is processed by a TPS—e.g., sales orders, payroll,
accounting, financial, marketing, purchasing, inventory control
Transactions are either:
• Internal transactions: occur or originate from within the
organization; e.g., payroll, purchases, budget transfers, & payments.
• External transactions: originate from outside the
organization; e.g., from customers, suppliers, regulators,
distributors, and financing institutions.
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TABLE 2.1 Business Transactions in a Manufacturing Company
Payroll and personnel
 Employee time cards
 Employee pay and deductions
Finance and accounting
 Financial statements
 Accounts receivable / Accounts payable
Sales
 Invoices and billings
 Sales returns
Production
 Production reports
 Quality control reports
Inventory management
 Material usage
 Inventory levels
Copyright 2012 John Wiley & Sons, Inc.
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Operations support system
Batch vs. Online Real-Time Processing
Processing of transactions is done in one of two modes:
1.
Batch processing: The TPS collects all transactions for a day
or other time period; and later processes the “batch” of
transactions at once.
2.
Online transaction processing (OLTP) or real-time
processing: The TPS processes each transaction as it occurs,
which is real-time processing.
•
OLTP requires that a network link the input device or
Web site to the TPS.
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Management support system
Management Information Systems (MIS)
General purpose reporting systems are referred
to as management information systems (MIS).
3 types of reports
1. Periodic: created or run according to a pre-set schedule.
2. Exception: generated only when something is outside the
norm.
3. Ad hoc: generated on an as needed basis.
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Management support system
Decision Support Systems (DSS)
Support unstructured and semi-structured decisions, such as
whether to make or buy products or what new products to
develop & introduce into existing markets.
3 characteristics of DSSs:
1. easy-to-use interactive interface
2. models that enable sensitivity analysis, what if analysis,
goal seeking, and risk analysis
3. data from internal databases, external sources, and
added by the decision maker who may have insights
relevant to the decision situation
Copyright 2012 John Wiley & Sons, Inc.
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2.3 Supply Chain and Logistics Support
Figure 2.8 Backstream and upstream components of a supply chain.
A company’s competitive advantage—low cost, reliability,
quality, or speed to market—depends on how well the
supply chain is managed.
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Logistics & RFID
Managing material and information flows to optimize
supply chain operations.
 Logistics has been described as having the right
thing, at the right place, at the right time.
 RFID (radio frequency identification) tags can be attached to
or embedded in packages or physical objects.
 RFID readers scan and input identifying information
from the tags via radio waves.

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Wal-Mart’s Global Sourcing Strategy for its
Backstream Supply Chain


Because Wal-Mart has thousands of suppliers and constantly
looks for new ones worldwide, they invested in a new global
sourcing strategy.
Benefits:
• reduced cost of goods to keep prices down
• increased speed to market
• improved product quality
Sourcing: identifying sellers (sources) that can provide Wal-Mart with
products or services to sell in stores and online.
Global sourcing: purchase of goods or services from sellers located
anywhere in the world.
Copyright 2012 John Wiley & Sons, Inc.
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2.4 IT Infrastructures, Cloud Computing, & Services

A company’s IT infrastructure determines the workload that
its ISs, apps, and mobile computing devices can handle and
their speed.
• IT infrastructure: collection of hardware, software,
processes, networks, and users.

IT infrastructure allows (and limits) the ability to store,
protect, and manage data so that it can be made accessible,
searchable, shareable, and actionable.
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Cloud Computing


To improve performance at lower up-front costs, companies
are turning to cloud computing.
• Cloud: term used to refer to the Internet.
Cloud computing has greatly expanded the options for
enterprise IT infrastructures.
Figure 2.10 Evolution to Cloud Computing
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IT at Work 2.4
U.S. government spent about $68.1 billion in 2008 on IT, with
1/3 spent on IT infrastructure. Using cloud computing can
significantly reduce costs and energy consumption.
U.S. Department of Defense (DoD):
 implemented a private cloud to service many military
agencies at reduced cost.
 did not adopt (public) cloud computing because of the
sensitive nature of their data.
 U.S. Navy has drafted guidelines for ordering cloud services,
but standards and policies for cloud computing have not yet
been established.
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What Services are Available in the Cloud?



Software-as-a-Service (SaaS): popular IT model in which
software is available to users as needed.
Other terms for SaaS:
• on-demand computing
• utility computing
• hosted services
Basic idea: instead of buying and installing expensive
packaged enterprise applications, users access software apps
over a network
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Moving to the Cloud raises questions
Which workloads should be exported to the cloud?
 Which set of standards to follow for cloud computing?
 How to resolve issues of privacy and security as things
move out to the cloud?
 How will departments or business units get new IT
resources? Should they help themselves, or should IT remain

a gatekeeper?
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Cloud computing limitations & trade-offs

Cloud computing runs on a shared infrastructure so the
arrangement is less customized to a specific company’s
requirements.

It’s more difficult to get to the root of performance problems,
like the unplanned outages that occurred with Google's Gmail
& Workday's human resources apps.

The tradeoff is cost vs. control
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Chapter 2 Link Library

Blog on cloud computing http://infoworld.com/blogs/david-linthicum

Planners Lab, for building a DSS http://plannerslab.com

Supply Chain and Logistics Institute http://SCL.gatech.edu/

Salesforce.com cloud demos http://salesforce.com

U.S. Defense Information Systems Agency http://disa.mil

Supply Chain, Europe’s strategic supply chain management resource.
http://supplychainstandard.com
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